PM to raid super funds to pay for infrastructure Actual cost of $22bn plan is $80bn Federal Budget 2009: All you need to know

THE Government plans to tap Australia's $1 trillion pool of superannuation savings to help plug a $58 billion hole in its nation-building program.

The funding shortfall for approved infrastructure projects has raised concerns that unless a greater portion of national savings can be accessed, some of the 15 rail, road and ports projects announced by Wayne Swan as Tuesday night's Budget centrepiece may never be built.

The Weekend Australian has learned the Government's advisory group, Infrastructure Australia, has turned its post-budget focus to developing new investment pathways to funnel super funds into infrastructure.

It is understood Infrastructure Australia will submit a set of recommendations to the Government, including various models that offer investment incentives to super funds.

Figures compiled by KPMG reveal the total cost of the Treasurer's nation-building program, to which the Government has allocated $22 billion over the next four years, is $80 billion.

The Government has emptied its Building Australia Fund and imposed on itself tight restrictions on future spending. At the same time, the global credit crunch has crippled the ability of the private sector to co-invest in government projects.

'Can't force funds to invest'

But the Treasurer says the Federal Government can't force superannuation funds to invest in infrastructure projects.

"If superannuation funds wish to invest in infrastructure, that's a great thing for Australia," Mr Swan told reporters on the Gold Coast.

"How superannuation funds invest their money is up to their trustees and their members."

However, the Treasurer refused to rule out offering incentives as a way of influencing funds.

Asked whether the Government might offer inducements in the future, he replied: "They (funds) take their decisions independently and that is the way it should be".

Only $1.7bn is new money

Figures within the Budget papers reveal that for all the hype surrounding the $22 billion spend on infrastructure - Mr Swan was variously portrayed as Bob the Builder and a railway worker the following morning - only $1.7 billion of new infrastructure money will be spent in 2009-10. This increases to $3.05 billion the year after.

Kevin Rudd donned a hardhat to inspect NSW rail works two days after the Budget, but only four projects will start work this year. Six projects will start next year and the rest in future years.

The $14 billion Brisbane inner-city rail, to which the Government has allocated $20million for a feasibility study, has not been given a start date.

The direct impact on employment is estimated to be about 5000 jobs created between now and next year.

The $1.6 billion Hunter Expressway, to which the Government has contributed $1.4 billion, will create 800 jobs next year, while improvements to Queensland's Bruce Highway, to which the Government has allocated $488million, will create 650 jobs this year.

Of these, eight are fully funded. Lobby group Infrastructure Partnerships Australia calculates the remaining seven projects require a further $27.3billion to build. These include the regional rail express in Victoria and the Gold Coast light rail project.

The funding models Infrastructure Australia will examine to make public-private partnerships more attractive to super funds include accelerating tax depreciation, tax incentives and infrastructure bonds. An unpopular consequence is likely to be a greater reliance on tolls, and London-style congestion charges to make public roads and rail more profitable.

Speaking to The Weekend Australian yesterday, Infrastructure Australia chairman Rod Eddington described the Government's $22 billion Budget package as an "important first step".

"With the gift of hindsight we have underspent on infrastructure for a couple of decades. This is an important first step in a much longer journey but given the size of the big infrastructure spend that is required, it will require much more," Sir Rod said.

News.com.au's Privacy Policy includes important information about our collection, use and disclosure of your personal information (including to provide you with targeted content and advertising based on your online activities). It explains that if you do not provide us with information we have requested from you, we may not be able to provide you with the goods and services you require. It also explains how you can access or seek correction of your personal information, how you can complain about a breach of the Australian Privacy Principles and how we will deal with a complaint of that nature.

Comments on this story

KB Posted at 7:29 PM May 17, 2009

What matters is how they go about it. Super funds need to be enticed to enter investment into infrastructure, it must be a better place to put the money than any or most others, not compulsorily acquired!

Joe of Melbourne Posted at 7:30 PM May 16, 2009

Given the government's projects tend to suffer cost blow out, lack of planning, not meeting expectation and not deliver on time. What is the hope for average Australians' super to grow if it is forcefully taken by the government? Look at Melbourne's infamous Myki Project, Brisbane's BrisConn fiasco, Sydney's now bankrupt Cross City Tunnel... Need I say more? It is all good to invite people to invest, it is another to FORCEFULLY ACQUIRE people's hard earn money.

A T Kenos Posted at 7:19 PM May 16, 2009

We have two choices. To help grow our nation, the government borrows from overseas and pays the interest overseas. Or it borrows from us and pays the interest back to us. I know what makes better sense

Agnes.B of Arana Hills Posted at 7:14 PM May 16, 2009

I think it is a good idea that Mr.Rudd is using the money which otherwise sits in super funds. I mean, it's not actually doing anything there, is it? I for one trust the government implicitly to do whatever is required to take us out of deficit. However, being old, bed-ridden and not political, I do not trust the Government, especially Mr.Rudd with all of this money. Or not.

A NOTE ABOUT RELEVANT ADVERTISING: We collect information about the content (including ads) you use across this site and use it to make both advertising and content more relevant to you on our network and other sites.